ABSTRACT: China is now the world's leading creditor nation, while the United States is the world's largest debtor. Beijing is the largest foreign holder of US government debt – passing Japan in 2008 to become, in effect, the US government's largest foreign creditor.
Canada has been a debtor nation for as long as economists can determine, drawing on foreign capital to tap resources and build factories.
America's newly acquired status as a debtor nation means that it no longer can rely on net flow of investment profits to raise the money to finance its mounting trade deficit and federal budget deficit.
A dozen of these countries owe debt of at least 20% of their nominal GDP to China (Djibouti, Tonga, Maldives, the Republic of the Congo, Kyrgyzstan, Cambodia, Niger, Laos, Zambia, Samoa, Vanuatu, and Mongolia).
The United States: No Longer a Creditor Nation
The United States is currently the most indebted country, according to its NIIP. This means the value of its domestically owned assets is less than its liabilities to foreign investors. The U.S. became a debtor nation in 1985 for the first time since World War I.List of countries by external debt
| Rank | Country/Region | Per capita US dollars |
|---|
| 1 | United States | 62,000 |
| 2 | United Kingdom | 127,000 |
| 3 | France | 87,200 |
| 4 | Germany | 65,600 |
A dozen of these countries owe debt of at least 20% of their nominal GDP to China (Djibouti, Tonga, Maldives, the Republic of the Congo, Kyrgyzstan, Cambodia, Niger, Laos, Zambia, Samoa, Vanuatu, and Mongolia).
Japan. Japan is the largest holder of U.S. debt, with $1.268 trillion in Treasury holdings. This is the highest level of debt owned by Japan in several years, beating out China as the largest holder of U.S. debt. The increase in Japan's holdings is its largest since 2013.
In North America, only Canada is a creditor nation. Investors keep an eye on NIIP figures when measuring the creditworthiness of a country and its businesses. Ultimately, terms of trade will be determined by nations with capital to lend, and debtor nations will be the ones that have to pay the bill.
List of creditor nations by net international investment position per capita
| Rank | Country | Per Capita (in USD) |
|---|
| 1 | Macau | 214,934 |
| 2 | Hong Kong | 176,694 |
| 3 | Singapore | 152,935 |
| 4 | Norway | 134,631 |
Senior economist Peter Buchanan of CIBC World Markets noted that Canada has been an international debtor every year since at least 1926. "Canada is now a net creditor to the rest of the world," said Bank of Montreal chief economist Douglas Porter.
The Net International Investment Position (NIIP) is the stock of external assets minus the stock of external liabilities. In other words it is the value of foreign assets owned by private and public sector of a country minus the value of domestic assets owned by foreigners.
The United States: No Longer a Creditor Nation
The U.S. became a debtor nation in 1985 for the first time since World War I. At the time of the shift in status, analysts cautioned against likening the United States to other big debtor nations, such as Brazil and Mexico, because the American economy was vastly stronger.Net lending (+) / net borrowing (-) (% of GDP) in China was reported at --0.42186% in 2015, according to the World Bank collection of development indicators, compiled from officially recognized sources.
External loan (or foreign debt) is the total debt which the residents of a country owe to foreign creditors; its complement is internal debt which is owed to domestic lenders. The debtors can be the government, corporations or citizens of that country.
What is a Creditor Nation? A creditor nation has a cumulative balance of payment surplus. A creditor nation has positive net international investment position (NIIP) after reconciling all of the financial transactions completed between it and the rest of the world.
The NIIP position is an important barometer of a nation's financial condition and creditworthiness. A negative NIIP figure indicates that a foreign nations own more of the domestic nation's assets than the domestic nation does of foreign assets, thus making it a debtor nation.
A creditor nation has a cumulative balance of payment surplus. A creditor nation has positive net international investment position (NIIP) after reconciling all of the financial transactions completed between it and the rest of the world.
The United States: No Longer a Creditor Nation
This means the value of its domestically owned assets is less than its liabilities to foreign investors. The U.S. became a debtor nation in 1985 for the first time since World War I.Saudi Arabia has maintained one of the lowest debt-to-GDP ratios due to its high export rates, which primarily consist of petroleum and petroleum goods.
The national debt (or government debt) of the People's Republic of China is the total amount of money owed by the government and all state organizations and government branches of China. As of October 2018, it stands at approximately CN¥ 80 trillion (US$ 5.2 trillion), equivalent to about 47.6% of GDP.
When debt is handled appropriately, it can be used to foster long-term growth and prosperity. But high levels of national debt for prolonged periods of time has a severe impact on the overall economy. Higher interest will have to be paid on government debt. Higher debt levels will mean limited jobs and lower salaries.
GDP based on PPP share of 2018 world total, in %
- China. China Nominal GDP: $14.14 trillion - China GDP (PPP): $27.31 trillion.
- Japan. Japan Nominal GDP: $5.15 trillion- Japan GDP (PPP): $5.75 trillion.
- Germany. Germany Nominal GDP: $3.86 trillion - Germany GDP (PPP): $4.44 trillion.
- India.
- United Kingdom.
- France.
- Italy.
- Brazil.
Among the economies we study, Australia has the highest household debt-to-GDP ratio (Figure 1), followed by South Korea, Malaysia, and Thailand. China has witnessed the fastest household debt growth.
1? Foreign governments hold about a third of the public debt, while the rest is owned by U.S. banks and investors; the Federal Reserve; mutual funds; state and local governments; and pensions funds, insurance companies, and savings bonds.
In 2013, the Japanese public debt exceeded one quadrillion yen (US$10.46 trillion), which was about twice the country's annual gross domestic product at the time. By 2015, the figure rose to US$11.06 trillion.
